By Sarah Curry, DBA
The COVID-19 pandemic began in March 2020, yet the federal government took over a year to direct financial relief to municipalities across the country through the American Rescue Plan Act (ARPA). The pandemic hit local communities across Iowa hard, but our governments survived the pandemic with little lasting fiscal damage. Now Iowa’s cities and counties face the task of spending ARPA funds while also complying with the U.S. Treasury’s complicated guidelines.
To discover how local governments were using these funds, Iowans for Tax Relief Foundation (ITRF) conducted a survey of select communities. Our intent was not only to report on what government officials have done, but also to discern the long-term effects for taxpayers.
While elected officials have been presented with countless ideas about how to spend ARPA funds, prioritizing the interests of the taxpayer should have been at the top of their minds. In addition to direct property tax relief, investments in permanent infrastructure projects and fulfillment of deferred maintenance obligations would be prudent uses of these funds. Putting taxpayers on the hook for future spending by hiring new employees, in contrast, is an example of windfall spending that should be avoided.
The cities of Davenport and Bettendorf, along with Scott County, received nearly $80 million, with $40.8 million going to Davenport. All three have obligated nearly all their ARPA funds to date; however, none of them have spent much, if any, of the money.
Scott County used its ARPA funds to support the Salvation Army for the homeless and to invest in affordable housing projects, jail modifications, and HVAC improvements in the administration building, while obligating most of the funds to infrastructure projects, including sewer connectivity, stormwater, and conservation trails. Bettendorf opted to classify all its ARPA funds in the revenue replacement category, allowing officials more flexibility to use the funds as they see fit. Meanwhile Davenport focused the majority of its funding toward sewer connectivity, flood mitigation, library enhancements, revitalization of multiple neighborhood parks, and design and construct of part of the Main Street Landing project.
Taxpayers across the state have questioned why ARPA funds were not used to reduce property taxes. While no local government in our survey chose to directly reduce its property taxes with ARPA funds, Scott County and Bettendorf cut their property tax rates in this year’s budgets by 9 cents and 15 cents, respectively. While Davenport’s city council chose not to reduce the property tax rate, it did choose to leave it alone, so there was no increase.
No doubt, many local governments experienced negative financial effects from the pandemic; however, assistance given nearly 18 months after the onset was arguably too late to do much good. In fact, more than 85% of the rescue funds allocated to local governments we surveyed remains unspent. Even now, when our lives are practically back to normal, the federal government is scheduled to send more money, which will only further contribute to the country’s rising inflation.
To read more details about this survey, visit itrfoundation.org/where-did-iowas-local-covid-relief-funds-go/.